State's tech-investment change has local effect

Updated 8:41 pm, Friday, November 30, 2012

Shifting priorities at the governor's Emerging Technology Fund are creating a ripple effect among the organizations in San Antonio that bring together inventors and entrepreneurs with investors so that new products can reach market.

The Emerging Technology Fund started in 2005 to invest in new startup companies, eventually growing to $200 million.

The San Antonio Technology Accelerator Initiative was selected for the South Texas area. SATAI, the main organization in San Antonio bringing together technology entrepreneurs with investors, changed its name to the StarTech Foundation in 2010.

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Over the years, StarTech became known mainly for its role as representing local startup companies to the state for ETF investments.

Since 2005, more than 1,000 applications have been reviewed. About 75 applications were processed, with 36 recommended for ETF investments. Eighteen eventually were selected for an injection of more than $32 million into the area, said Jim Poage, StarTech president and CEO.

StarTech recently announced it would stop processing ETF applications on Jan. 1. The reason: The state is shifting its priorities from making investments in companies to helping Texas universities attract “star” researchers and helping form consortiums of companies that would work on a common project.

The governor's office asked the regional offices to be able to screen those additional incentive proposals, but StarTech declined and will lose its regional office status Jan. 1. “It's not our core competency,” Poage said of the new priorities.

“We are looking at the application processes and deadlines to see if it is a good fit for us,” said T3DC President and CEO Randall Goldsmith. “We want to make sure Bexar County has a (regional office) presence.”

The state makes contracts with its regional offices for the screening services. StarTech received $245,000 in 2010 and 2011, for example. Poage said StarTech will remain strong financially and will not reduce its staff of five after the contract ends.

“We will continue to look for more funding like we always do,” Poage said, explaining that StarTech refers entrepreneurs to more than 20 other investment and assistance sources, such as the Angel Capital Association, venture capital companies and federal grant programs.

The ETF was just “one brick in the wall,” Poage said.

But StarTech board Chairman Brad Hunt said StarTech “just lost a big client” with the end of the state contract. “It will be a big challenge to replace it,” Hunt said.

The city has a lot at stake in seeing StarTech continue. City Economic Development Director Rene Dominguez said the city has invested about $3.95 million in setting up and funding SATAI/StarTech since 2001. The city stopped sending grants to StarTech in 2011.

San Antonio needs both StarTech and a regional office. The city needs StarTech to remain a strong organization that helps companies and entrepreneurs commercialize their products. It also will need a new, effective representative for state investments — to the extent the state will continue to invest in technology companies.